Capital Gains Tax Change Delayed – What Small Business Owners Need to Know

Good news! The Canadian federal government has delayed their planned increase to the capital gains inclusion rate. Here’s what that means for small business owners:

What’s Changing?

• The capital gains inclusion rate was set to increase from 50% to 66.67% for gains after June 24, 2024.

• This increase has now been pushed back to January 1, 2026.
  

How Would This Impact Small Businesses?

An increase in the capital gains inclusion rate means that a greater portion of capital gains would be taxable, Meaning you pay more taxes on selling any assets. For small business owners, this change could significantly impact decisions related to transactions such as selling a business, transferring ownership, or liquidating investments. A higher inclusion rate results in higher taxes, meaning owners would retain less after-tax profit when selling their assets.

What This Means for Small Business Owners

• More time to plan if you're selling a business, real estate, or investments.

• No immediate impact; the current 50% inclusion rate remains until 2026.

• Late-filing relief is available:

  • Until June 2, 2025, for individuals.

  • Until May 1, 2025, for trusts.
    

What Should You Do?

• Talk to us to understand how this might affect you.

• Consider timing to strategically plan before the 2026 potential changes.

• Stay informed about future tax changes that may impact your business.

  
  

This delay offers small businesses a chance to prepare rather than rush into financial decisions. If you’re unsure how this affects you, contact us. This blog post is for informational purposes only and should not be considered financial, tax, or legal advice. Tax laws and policies can change, and individual circumstances vary. Consult with us before making financial decisions based on this information.